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Dalmia Bharat inks deal to acquire Jaypee Group assets for Rs 5,666 crore

business | Dec 12, 2022 3:22 PM IST

Dalmia Bharat inks deal to acquire Jaypee Group assets for Rs 5,666 crore


Overall consideration to be paid for this acquisition will be Rs 5,666 crore.

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Cement major Dalmia Bharat Ltd. has entered into a binding framework agreement to acquire cement, clinker and power plants from Jaiprakash Associates Ltd. and its associates. Overall consideration to be paid for this acquisition will be Rs 5,666 crore.
The assets have a total cement capacity of 9.4 million tonnes, clinker capacity of 6.7 million tonnes and thermal power plants of 280 MW. The said plants are located in Madhya Pradesh, Uttar Pradesh and Chhattisgarh, the company said in an exchange filing.
The acquisition will enable Dalmia Bharat expand its footprint into Central India and will also enable the company to move towards realising its vision of emerging as a pan-India cement company with a capacity of 75 million tonnes by financial year 2027 and 110-130 million tonnes by financial year 2031.
Not only does this deal enable Dalmia Bharat expand and diversify its regional presence, it will provide the company a 10 percent capacity share in the Central India market. Central India represents close to 15 percent of India's cement demand, according to Dalmia Bharat's investor presentation.
The demand in this region is likely to grow at a compounded annual growth rate (CAGR) of 7 percent in the medium-term. The top five players in Central India control nearly three-quarters of the cement market.
The transaction is subject to due-diligence, requisite approvals from lenders and Joint Venture partners of Jaiprakash Associates and other regulatory authorities.
The board of directors of Jaiprakash Associates and Jaiprakash Power Ventures had approved their respective divestment plans in October in order to reduce their debt.
While the board of JPVL decided to disinvest the company's Nigrie Cement Grinding Unit, the board of JAL cleared divesting the company's significant cement business.
Dalmia Bharat will also buy the 2 MTPA Nigrie grinding unit in Madhya Pradesh, which will belong to JP Power.
CNBC-TV18 had reported in October that a large conglomerate was set to buy these assets and most of the money that JP Associates would receive, would be used to pare down the debt.
Combining short and long-term debt, JP Associates had overall debt of Rs 28,648 crore when CNBC-TV18 reported this story in October. The deal is also beneficial for JP Associates as it will prevent lead banker SBI to drag the company to the NCLT.
Shares of Dalmia Bharat ended 3.5 percent higher at Rs 1,912, JP Associates remained locked in a 10 percent upper circuit through the day, while Jaiprakash Power ended 10.7 percent higher at Rs 8.30.
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